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Author Topic: P-Noy saves SSS from bankruptcy, upholds pension fund sustainability  (Read 449 times)

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P-Noy saves SSS from bankruptcy, upholds pension fund sustainability

 The Social Security System (SSS) has lauded Malacañang’s support for preserving the pension fund’s long-term sustainability, following President Benigno S. Aquino III’s decision to veto House Bill 5842 which seeks an across-the-board SSS pension increase of P2,000.

SSS President and Chief Executive Officer Emilio S. de Quiros, Jr. said that the proposed increase would have consequences for both the 2.15 million current pensioners and 31 million members. At least P56 billion would be needed to fund the additional P2,000 benefit for the 2.15 million pensioners annually.

“The P2,000 pension increase would lead to a projected deficit of P26 billion for 2016 from an expected income of P41 billion. As the number of pensioners grows, the initial P56 billion in additional benefit outlay per year would increase, which in turn contributes to the rising annual deficit or net loss incurred by SSS,” de Quiros said.

SSS funds, projected to last until 2042 or 26 years from now, would be wiped out by 2029 or in 13 years, as presented to Congress in June 2015, due to recurring net losses caused by the P2,000 pension increase. However, given the low market sentiment and the need for SSS to divest P47 billion to P51 billion in financial assets to fund the increase in pension benefit, the fund life would be further reduced to 2027.

“The P2,000 increase and resulting shorter fund life will greatly affect our 33 million members and pensioners as well as their dependent spouses, minor children and other beneficiaries who are also mandated to receive their own share of SSS benefits,” de Quiros said.

In terms of absolute value, the state-run agency provides members a generous return of P6 to P15 in benefits for every peso they contribute to the SSS.

“SSS financial gains since 2010 to further improve the stability of the fund would be negated if the P2,000 pension increase was approved. It would be shortened to an alarming 11-year period from now,” de Quiros said.

SSS fund life has been strengthened by various financial achievements over the past few years. Annual net revenues, for example, averaged P33 billion from 2010 to 2014, much higher than the P8 billion average for 2000 to 2009; assets grew by 50 percent from P298 billion as of 2010 to P447 billion as of October 2015; and contributions collected by SSS per year were also more than enough to cover expenses for benefits and operations since 2012, with the annual investment income stored in the reserve fund. More than 100 offices were also established since 2010 to bring SSS closer to members.

Social Security Commission Representative for the General Public Michael Victor N. Alimurung noted that it is risky to compel SSS to implement a drastic pension increase as proposed by a bill silent on any source of funding, and just pin hopes on the next administration to avert the depletion of SSS funds.

“Unpopular as the veto decision may be, it was the right thing to do. It shows that the President is principled enough to withstand pressure, by refusing to support a bill that he knows will lead to the financial ruin of the SSS. With the Malacañang decision, we continue to further strengthen the SSS to become sustainable and viable,” he added.

To implement the P2,000 pension increase and still maintain the present fund life of 26 years, the contribution rate needed to be increased from the present 11 percent to 15.8 percent. In the absence of a contribution rate increase, the government would have to provide a minimum annual subsidy of P130 billion per year starting 2030, after the SSS investment reserve fund has been fully exhausted.

De Quiros, meanwhile, said that “the SSS will continue with its mission to implement measures that would truly redound to the financial stability of the institution, extend meaningful benefits, and maintain the trust and confidence of the present and future stakeholders.”
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islander

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Re: P-Noy saves SSS from bankruptcy, upholds pension fund sustainability
« Reply #1 on: January 17, 2016, 02:47:04 AM »

GET REAL

Legislators thinking of themselves in pushing SSS pension hike

By: Solita Collas-Monsod
@inquirerdotnet
Philippine Daily Inquirer
January 16th, 2016


People fall in line at the Membership Assistance Center of the Social Security System (SSS) Building at East Avenue, Quezon City. RAFFY LERMA

House Bill No. 5842, or the proposed Social Security Act, would give our private-sector pensioners an across-the-board increase of P2,000 in their monthly pensions. All 2.15 million of them. What’s wrong with that? It would be great for the pensioners, right?  And moreover, think of the political bonanza it would give to the authors and sponsors of the bill in the respective chambers of Congress, in an election year even.

But take a closer look at it, do a little arithmetic, and you will realize that our legislators were (as usual?) thinking of themselves rather than the country. And they were willing to let the pensioners bask in false hopes for a while, betting that President Aquino would not dash those hopes in an election year.

Their bet failed. The President has vetoed the bill. Only consider: How much will that bill set the Social Security System back yearly?  P2000 x 13 months (Christmas bonus) x 2.15 million pensioners = P56 billion. Yearly. That was easy, wasn’t it?
Republic Act 8485 (Animal Welfare Act of 1998, Philippines), as amended and strengthened by House  Bill 6893 of 2013--- violation means a maximum of P250,000 fine with a corresponding three-year jail term and a minimum of P30,000 fine and six months imprisonment


islander

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Re: P-Noy saves SSS from bankruptcy, upholds pension fund sustainability
« Reply #2 on: January 17, 2016, 02:47:40 AM »

Next question: How much does the SSS earn from its investments? Yearly? It gives a range of from P30 to P40 billion a year (last year it was P40 billion). So do the arithmetic. The shortfall of the SSS will be anywhere from P16 billion to P26 billion.

So how will the SSS finance that deficit or shortfall? If the SSS takes it from the principal or its corpus, then it will be only a matter of time before it bellies up. Estimates range from 11 years to 14 years. Is that what we want? And think of the pensioners who will still be alive by then. From very little pension to no pension at all.

But doesn’t the SSS collect premiums from current members? Why can’t that be used? Oops, sorry. The SSS has things like salary loans, sickness and disability payments, and help for members who have suffered from disasters and catastrophes. In other words, there are other members that the SSS has to take care of: Membership estimates run to over 30 million, or if we take out the pensioners, 28 million. Their needs also have to be attended to. And those members will be put at risk with this pension increase of HB 5842.
Republic Act 8485 (Animal Welfare Act of 1998, Philippines), as amended and strengthened by House  Bill 6893 of 2013--- violation means a maximum of P250,000 fine with a corresponding three-year jail term and a minimum of P30,000 fine and six months imprisonment


islander

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Re: P-Noy saves SSS from bankruptcy, upholds pension fund sustainability
« Reply #3 on: January 17, 2016, 02:48:45 AM »

So the question is: Didn’t our legislators know about this when they were studying the bill? Of course they did. Certainly, the SSS must have told them, and given them all the actuarial estimates. I understand that the SSS told them that a P500 across-the-board increase would be affordable, as long as it is accompanied by lower benefits to current members. But a P500 pension increase wasn’t “bongga” enough, and may not assure election or reelection.  So the legislators probably thought (the media reported some of it): “We’ll provide for P2,000. Never mind the impact on SSS long-term financial viability, because the President surely will bring it down to P1,000, rather than veto it. We’ll still come out smelling like roses, because we can blame him for lowering the pension increase.”

In other words, they were leaving it up to the President to worry about the financial viability of the SSS. They were playing a political game.
Republic Act 8485 (Animal Welfare Act of 1998, Philippines), as amended and strengthened by House  Bill 6893 of 2013--- violation means a maximum of P250,000 fine with a corresponding three-year jail term and a minimum of P30,000 fine and six months imprisonment


islander

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Re: P-Noy saves SSS from bankruptcy, upholds pension fund sustainability
« Reply #4 on: January 17, 2016, 02:49:15 AM »

Let’s continue with the thought processes of those legislators: “Anyway, the impact of our (irresponsible) actions now will be felt much later. Public memory is very short. And besides, the future governments will not let the SSS go down. They will save it.”

Well, how much will that “save” cost? That, too, has been estimated by the SSS. A government subsidy (covering the difference between SSS revenues and expenditures) would amount to P130 billion in 2028, and rising by an additional P20 billion a year. Think of the opportunity costs of that money: Which items of competing expenditures would be foregone by the government to save the SSS? And when we talk about a government subsidy, let us remember that it is the Filipino people who are paying for it. But, of course, that’s 14 years from now.
Republic Act 8485 (Animal Welfare Act of 1998, Philippines), as amended and strengthened by House  Bill 6893 of 2013--- violation means a maximum of P250,000 fine with a corresponding three-year jail term and a minimum of P30,000 fine and six months imprisonment


islander

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Re: P-Noy saves SSS from bankruptcy, upholds pension fund sustainability
« Reply #5 on: January 17, 2016, 02:50:22 AM »

Which gives rise to another question: Is that the kind of political leaders we want? Who think only of the short term, and think only of the benefits to themselves?  Just listen to what they are saying now: How heartless is P-Noy, how cruel, how lacking in compassion, his fear that the SSS will go belly up is a “phantom fear,” he should give it as a gift to the Filipino people to commemorate Edsa.

Good grief. Look at the facts, the numbers. Ignoring them will not make them go away.
Republic Act 8485 (Animal Welfare Act of 1998, Philippines), as amended and strengthened by House  Bill 6893 of 2013--- violation means a maximum of P250,000 fine with a corresponding three-year jail term and a minimum of P30,000 fine and six months imprisonment


islander

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Re: P-Noy saves SSS from bankruptcy, upholds pension fund sustainability
« Reply #6 on: January 17, 2016, 02:51:46 AM »

And the speed with which the bill was passed! By the way, the only legislator who voted against the bill was Sen. Juan Ponce Enrile. Good for him.

I will say this, however. I think the President should have allowed the P500 across-the-board increase, that being what the SSS had suggested in the first place. Instead of vetoing the bill outright. Perhaps he was tired of playing “chicken.”

The Reader may well ask: How come the Government Service Insurance System pensioners get much larger pensions than the SSS pensioners? My husband’s SSS pension is something like P5,000 a month; my GSIS pension is something above P20,000—and I never earned (as a University of the Philippines professor) anything near to what he was earning.
Republic Act 8485 (Animal Welfare Act of 1998, Philippines), as amended and strengthened by House  Bill 6893 of 2013--- violation means a maximum of P250,000 fine with a corresponding three-year jail term and a minimum of P30,000 fine and six months imprisonment


islander

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Re: P-Noy saves SSS from bankruptcy, upholds pension fund sustainability
« Reply #7 on: January 17, 2016, 02:52:29 AM »

Again, there’s no “magic” in it. It’s simple arithmetic. Government employees contribute 9 percent of their income every month to the GSIS. The private-sector employees contribute only 3.63 percent of theirs to the SSS. What’s more, that 3.63-percent contribution is subject to a maximum P15,000 of income, while GSIS members have no such ceiling; they pay 9 percent on total income. The government contributes 12 percent of income as its contribution, so the total is 21 percent. In the SSS, employers pay 7.36 percent, so the total is 11 percent. If the private sector wants larger pensions, it should contribute larger amounts.  Truth hurts.

http://opinion.inquirer.net/
Republic Act 8485 (Animal Welfare Act of 1998, Philippines), as amended and strengthened by House  Bill 6893 of 2013--- violation means a maximum of P250,000 fine with a corresponding three-year jail term and a minimum of P30,000 fine and six months imprisonment

 

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